Billionaire Leon Cooperman advised investors on Wednesday to stay away from bonds as they are in a bubble.
“My world is cash and stocks. I think bonds are the bubble, not stocks,” Cooperman told CNBC’s “Halftime Report.” He also noted investors should buy stocks they see as “fundamentally cheap” after a recent decline in equities.
Cooperman’s comments come after the benchmark 10-year note yield rose to 3.261 percent last week, its highest level since 2011. The sharp rise in rates spooked investors across the globe, with world equities falling sharply last week.
The Federal Reserve dropped its overnight interest rates to zero in the aftermath of the financial crisis as it tried to jumpstart the U.S. economy. This pushed yields down to historical lows, thus sending bond prices higher and to levels that some investors like Cooperman say reached bubble proportions. Now the Fed is reversing these policies by rising interest rates and trimming its balance sheet. The central bank has already hiked rates three times this year and is forecast to raise them once more before year-end.
Investors were worried that a rise in rates would lead to higher borrowing costs and thus slow down the global economy.
Cooperman, the CEO of Omega Advisors, said the market can handle higher interest rates, however, as there are no signs of a recession looming.
“The economy, if anything, is too strong,” Cooperman said. “The economy is on fire … The conditions that normally lead to a big decline just aren’t present.”
Cooperman’s comments come as U.S. stocks try to recover from a 4.1 percent decline last week amid worries about higher rates, tech valuations and fears of a global economic slowdown.Red Creatyve Ankle Boot - Women Red Creatyve Ankle Boots online on YOOX United Kingdom - 11458578XT , Giuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11515545DL , 3.1 Phillip Lim Loafers - Women 3.1 Phillip Lim Loafers online on YOOX United Kingdom - 11511210GQ , Hogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11176259FXHtc Ankle Boot - Women Htc Ankle Boots online on YOOX United Kingdom - 11452762VBLV 48793 FASHION LOAFERS FOR WOMENCole Haan Yellow Nike For Sandals , MARIA MARE 66985 C40432 Rojo FASHION SANDALS FOR WOMENHOGL 2105086 ZAPATO DE SALóN PARA MUJERmen's/women's Vince Drystan Oxfords the most economical , men/women Aquatalia Golda Loafers In short supply , Juvenate woven premium trainers , black, Nike , Selected Homme SLHDERRY TRAINER - Trainers Fromman/woman Pier One Slippers Colour: navy Brandmens/womens Johnston & Murphy Geneva Heels best sellerWEEKEND MaxMara ROLF - Classic ankle boots , Premiata Sneakers - Men Premiata Sneakers online on YOOX United Kingdom - 11032112LU , man/woman Nine West Rayna Heels Win the praise of customers , Diadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11231321QM , Diemme Sneakers - Women Diemme Sneakers online on YOOX United Kingdom - 11500638XO , 2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11506515IR , Barracuda Ankle Boot - Women Barracuda Ankle Boots online on YOOX United Kingdom - 11536319NUCafènoir Flip Flops - Women Cafènoir Flip Flops online on YOOX United Kingdom - 11406751UF , O Jour Court - Women O Jour Courts online on YOOX United Kingdom - 11557959JJ , Black Dioniso Sneakers - Women Black Dioniso Sneakers online on YOOX United Kingdom - 11484732HA , 0slRIfAb Jerusalem Sandals Asher - Mens , 0uJHmYNo lady Tod's Gray Sandals Cheap , Elegant shape bernie mev. TW 80 , Easy life Dr. Scholl's Critic , WOMENS Nike Black Rosherun Sneakers Large selection ,
But Cooperman thinks stocks will bounce back from this decline as they are fairly valued. He also noted the market can handle higher interest rates.
“My central view is the market will be higher than it is today at year-end,” he said. “We’re in a zone of fair value and it’s going to take a recession or a change in the Fed’s posture” to get us out of that.